Saturday, May 19, 2018

Page 1766

“N-no,” she said, taking a breath. If she kept this up, he was going to get the completely wrong impression. “Very well. Allow me to speak quite plainly with you. The current economic crisis, terrible though it may be, presents us--presents you, I should say--with an opportunity. And a rather remarkable one, at that.”

“With both Atreya National and Longrun collapsing, virtually everyone who worked for them is now out of a job.”

“You’re... talking about banks?” said Hector.

“Yes. Atreya National Bank and Longrun Banking. With them suddenly out of the picture, you could say that there is quite a large gap in the market. People need their funds protected. And now that there is an absolutely ungodly amount of insoluble debt floating around this country, what will happen now is--”

“Debt that cannot be repaid. More than a million people have just declared bankruptcy in this country, because they no longer have access to any of their funds due to the banks collapsing, because the banks are the very institutions which are supposed to secure these things for them. This means that any debt that these people previously owed is now insoluble. There is essentially no hope of it ever being paid back. Understand?”

“I think so, yeah...”

“So what will probably happen now,” Amelia went on, “is that someone with a LOT of money will come in and buy up all of that insoluble debt at a fraction of the cost, because it is functionally worthless now. And then, since they now ‘own’ the debt, they can ‘forgive’ it or otherwise shrink it down to a ‘soluble’ level--and then try to collect it. Or they could simply resell the debt elsewhere, but the fact of the matter is that because they didn’t spend very much money to acquire it, that debt has the potential to earn them an absolute killing. Financially speaking, of course.”

“Hmm...”

Amelia placed her hands on the table. “Now, this may all sound horrible, and... well... in a way, it is, but it is also mostly good. In the end, it will probably prevent Atreya’s economy from collapsing completely. Almost everyone who declared bankruptcy will have a way to move forward without having their entire lives ruined. For the most part.”

“But?” said the young lord, apparently sensing where she was going with this.

“But... a very large problem could arise, based on who it is that buys up all of that debt. Atreya is quite a small country, so in all likelihood, it is going to be a foreign bank. Domestic banks are no doubt attempting to get in on the action as we speak, but they simply won’t have the funds to spare. Tens of thousands of people--if not hundreds of thousands of people--have already been flocking to them simply to avoid bankruptcy, and in order to accommodate all of those new customers, most of their reserve funds--assuming they even had that much to begin with--will likely now be in active circulation.”